Constantinople Delay Leaves Ethereum Stuck
Oct 26, 2018
Perhaps the most promising decentralized application platform in the cryptocurrency industry, Ethereum’s (ETH) development is limited by the one thing meant to move it forward: Constantinople. Featuring five Ethereum Improvement Proposals (EIPs), Constantinople introduces small, yet highly technical improvements to the Ethereum Network meant to lower costs for developers, improve network efficiencies, and move Ethereum towards an off-chain scaling solution. The issue? An attempt at activating Constantinople caused an unprecedented three-way fork on a public Ethereum testnet, Ropsten. Developers have since delayed Constantinople until the beginning of 2019, but to what end? As developers continue to delay the activation of Ethereum’s next hardfork, a looming Difficulty Bomb that would render Ethereum useless ticks closer. A large part of the cryptocurrency community believes cryptocurrency prices have bottomed, but with the delay of Constantinople, ETH holders will likely not see positive developments surrounding ETH for months. To understand the full impact of the Constantinople delay, we must first understand the history of Ethereum Network forks and the ever-looming Ethereum Difficulty Bomb.
Shortly after the initial launch of the Ethereum Network on July 30th, 2015, Ethereum developers enacted the ‘Frontier’ patch, Ethereum’s first ever software change, in August 2015. The Frontier patch introduced for the first time the Ethereum Difficulty Bomb, a piece of code that, starting from block 200,000, increased the mining difficulty of an Ethereum block -- slowly at first and then at a much more rapid pace. The purpose of the Difficulty Bomb is to force developers to transition to a proof-of-stake system, known as Casper, before Ethereum’s block difficulty reaches a point that effectively renders the Ethereum network useless. The Difficulty Bomb has another purpose; if Ethereum undergoes a software change, or hardfork, that splits the Ethereum blockchain into two, the Difficulty Bomb will eventually prevent miners from mining the old blockchain because the high level of difficulty would render mining ineffective.
The Ethereum Difficulty Bomb was on pace to bring about what some cryptocurrency pundits call the ‘Ethereum Ice Age’, or point when the Ethereum Network freezes and becomes useless due to high levels of mining difficulty, near the end of 2017. Developers delayed the Ice Age further to allow for more time to develop Casper through the Metropolis fork in June 2017. The Metropolis fork slowed the pace of difficulty increases to once every 1,000 blocks and effectively delayed the Ethereum Ice Age until the middle of 2019 to give developers ample time to develop Casper.
What is Constantinople?
On July 27th, 2018, developers announced plans to enact Ethereum’s next hardfork, Constantinople, by October 30th, 2018. The Constantinople system-wide upgrade features small, yet highly technical maintenance and optimization improvements to effectively improve efficiency and fee structures on the Ethereum Network. Constantinople also enacts changes in Ethereum’s underlying policy to further delay the Ethereum Ice Age an additional year. Specifically, there are five Ethereum Improvement Proposals (EIPs) in the Constantinople system upgrade: EIP 145, EIP 1052, EIP 1283, EIP1014, and EIP 1234.
Both EIP 145 and EIP 1052 address improvements in the Ethereum Network’s efficiency by making changes to Ethereum’s underlying virtual machine (EVM). EVM is currently responsible for processing smart contracts on the Ethereum network by converting smart contracts into a series of ones and zeros, called bytecode, using arithmetic operations like multiplication and division. EIP 145 introduces ‘bitwise shifting’ to the Ethereum Network, which allows the EVM to process smart contracts without relying on arithmetic operations -- after EIP 145’s implementation, the EVM will be able to process smart contracts used by decentralized applications (dApps) much faster. EIP 1052 increases the Ethereum Network’s efficiency by only requiring essential data of a smart contract to be checked by the EVM, compared to today where the EVM verifies s smart contract’s entire code. EIP 1052 accomplishes this by compressing a smart contract’s data into a single line of code, or hash, that can be verified by the EVM -- this results in saved computing time and reduced costs on the Ethereum Network.
EIP 1283 is aimed towards reducing the cost developers are required to pay when building and storing smart contracts. EIP 1283 accomplishes this by introducing a more efficient cost analysis system for smart contracts that breaks down what smart contract changes have been written in Ethereum’s memory, or short-term storage, rather than the blockchain itself. According to Nick Johnson, Ethereum developer and author of EIP 1283, in the past, Ethereum has charged dApp developers for things that did not actually happen or cost any real resources -- EIP 1283 attempts to align what dApp developers are charged with the work dApp developers require of the Ethereum network through the employment of smart contracts.
Tackling scaling of the Ethereum network in the upcoming Constantinople upgrade is EIP 1014, which was authored by Ethereum co-founder, Vitalik Buterin, and implements steps towards achieving state channels. State channels is an experimental scaling solution that boosts blockchain transaction volume by introducing a separate network layer to facilitate off-chain transactions. The separate network layer is connected to Ethereum’s main blockchain through hashed time-lock contracts, or contracts that eliminates counterparty risk -- in many ways, the state channels solution is to Ethereum what the Lightning Network is to Bitcoin. EIP 1014 is not a full implementation of state channels scaling in Ethereum, however, it does take necessary steps towards eventually achieving state channels scaling in the future.
Perhaps the most controversial aspect of Constantinople, EIP 1234 addresses the looming Difficulty Bomb and delays it by roughly 12 months. EIP 1234 achieves the 12-month delay by providing the Ethereum Network with a fake block number that tricks the network into thinking a current block is far earlier than it really is -- because earlier block numbers call for lower mining difficulty, mining times will be faster and the looming Ethereum Ice Age will be further away. To compensate for faster mining times, EIP 1234 lowers the Ethereum block reward from 3 ETH to 2 ETH.
A large portion of the Ethereum mining community has taken a stance against EIP 1234, as it lowers the mining reward per block and could result in thinned mining profit margins. Miners have raised concerns that thin mining profit margins could set Ethereum on a course for more centralization in its mining community -- this concern is further bolstered by the growing popularity of ASICs, a type of highly competitive mining hardware that effectively eliminates hobbyists from mining.
Constantinople gets Delayed
Constantinople was nearing its October 30th, 2018 launch deadline when on October 13th, 2018, an issue occurred on Ropsten, a public Ethereum testnet trialing the Constantinople hardfork. Constantinople was set to activate on Ropsten at block 4,230,000, however, the network stalled for two hours at block 4,229,999 as miners failed to activate the transition. According to Ethereum client developer, Alfri Schoeden, the issue occurred after recently added hashpower caused shorter block times than historically normal, leading the hardfork to occur much earlier than expected. Block 4,230,000 was reached on a Saturday and Schoeden noted that not a single user was mining the Constantinople chain, causing the two-hour delay in processing block 4,230,000. The delay resulted in a consensus issue that induced a three-way fork of the blockchain. In a meeting the following Friday on October 19th, 2018, Ethereum developers reached a consensus to delay the launch of Constantinople until January 2019 at the earliest.
What’s Next for Ethereum?
Ethereum is perhaps the most promising decentralized application platform in the world, but the delay of Constantinople is cause for concern. Ethereum dApp developers and ETH investors alike must now wait months in order to fully understand what the Ethereum Network’s true capabilities are. The Ethereum mining community is aware of a looming mining reward per block cut from 3 ETH to 2 ETH, and this could potentially cause Ethereum to lose the support of its mining community if coupled with a pullback in ETH prices. The delay of Constantinople may not directly cause a loss of value in ETH; the world’s second largest cryptocurrency by market capitalization is still the flagship decentralized application platform where dApp developers can raise capital through an initial coin offering. However, neither the Ethereum Network or ETH can begin gaining forward momentum until Ethereum developers properly implement the Constantinople upgrade into the main Ethereum Network.